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Thoratec Wins Approval in Japan

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Thoratec Corp. , a leader in mechanical circulatory assistance devices, recently revealed that it was granted approval by the Japanese Ministry of Health, Labour and Welfare to commercialize HeartMate II for bridge to transplantation purposes for victims of advanced heart failure.

Thoratec and its distributor partner Nipro Corporation forecast commercialization of HeartMate II in Japan around the latter part of the first quarter of 2013. Prior to the launch, the reimbursement mechanism will be set up and the participating centers trained. Around 15 hospitals will participate in the launch including the earlier trial locations and other institutions certified to carry out ventricular assist devices (VAD) procedures.

Thoratec will provide training in surgical procedures besides extending help to Nipro. For its part, Nipro will provide qualified staff to ensure clinical, marketing and sales backup for the commercialization of HeartMate II.

Ventricular Assist Devices represent a multi-billion dollar market opportunity. It is estimated that, in addition to the bridge-to-transplant (BTT) market, the Destination Therapy (DT) market in the U.S. may eventually attain a significant size. Until HeartMate II came up as a viable option, the only treatment was heart transplant surgery.

HeartWare International Inc. , a global provider of miniaturized ventricular assist devices (VAD) for diagnosis of advanced heart failure, disclosed on November 20, 2012, that the U.S. Food and Drug Administration (FDA) has granted clearance for its HeartWare Ventricular Assist System as a bridge to heart transplantation device for patients with end-stage heart failure. The FDA approval has been eagerly awaited ever since HeartWare submitted its Premarket Approval (PMA) application in December 2010. The company obtained European CE Mark for the HeartWare system in 2009 and Australian Therapeutic Goods Administration (TGA) approval in 2011.

However, there is no imminent competitive threat from HeartWare in the DT segment, as the product is not expected to be launched possibly till 2015. We believe that DT will account for the major part of growth in the Ventricular Assist Device (VAD) market.

Despite less visibility, Thoratec has expertise in product development. The company is currently developing its next generation HeartMate III. At the same time, HeartWare is expected to close the technological gap. The company continues to do well in overseas markets despite economic turmoil in Europe.

Our Outperform recommendation is supported by a short-term Zacks #1 Rank (Strong Buy).

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